Many Canadian boys dream of playing in the NHL. It’s a game (at least when you’re young), and the idea of getting paid millions of dollars to play a game with your friends and teammates – and maybe one day win a Stanley Cup – can be very appealing. But that dream can quickly turn into a nightmare if proper steps aren’t taken to secure financial independence once the short-lived career of a professional athlete comes to an end.
In reality, the life of most NHL hockey players is a grind. The average NHL career length is only three years and somebody always wants your job. Not everybody can be Jonathan Toews or Sidney Crosby, where winning and multi-million dollar contracts seem to come easily. These two are among the best players in the world, while the other third or fourth line players on their team(s) could easily be interchanged.
They’ll earn a decent living, compared to the average worker, and have their summers off (aside from the off-ice training they keep to during most of the off-season). But when you consider that the money they’ll earn after escrow*, taxes, agent fees, personal trainer fees, disability insurance, and taking into account that this money has to sustain them for the next 60 years of their life (assuming they play until age 30 and live until 90) – maybe a different career choice would have been better for them financially.
Much depends on where you play when it comes to how much tax an NHL player is going to pay. For instance, if you’re lucky enough to go to the rink most days in shorts and flip-flops while playing in Florida, you won’t pay State tax. However, if you play in Montreal, half of your pay will go towards income tax. So that $3 million-per-year contract will probably net you around $1.2 million after all the items listed above – and that’s before you’ve paid for rent/mortgage, food, car, or property taxes (or contributed to any retirement savings).
Given that most players like to pay back parents with gifts and support friends to some degree, it would be very easy for a young player to lose track of where all his money is going. If/when he gets married and has children, his lifestyle expenses will take another jump.
Consider that you have to be a fairly good player to earn $3 million per year (there are some players on an NHL team, usually three or four, earning the league minimum of $625,000 per season). After all the expenses listed above, you would be lucky to have $300,000 left over. Still a nice living, but a physically demanding one that needs to provide you with a nest egg to last until age 90.
What often happens after an NHL player’s career is over is “another job”. This could be either coaching or teaching in the game, or may be a position in another industry altogether. Most likely though, the income earned in their second career will be far less than what they were earning as a player because, in most cases, a high school education is all young players have time for.
So while NHL remuneration should be large enough for some players to build a decent living and retirement nest-egg, without good money management their funds can quickly dwindle. If professional athletes aren’t careful, they can forget the dream of golfing, raising a family and travelling for the next 60 years.
Working with a financial expert to put a financial game plan in place during those peak earning years is crucial for maximizing income and securing financial independence. You wouldn’t dream of playing hockey without a coach, so why would you even think of trying to manage your money without a financial coach?
*A portion of NHL salaries are withheld at source according to a formula based on (and in anticipation of) league revenue, which the player may or may not recover.
Terry Willis has almost 20 years’ experience in financial services, with particular expertise in working with professional athletes. He understands that the earnings potential of most athletes is often short-lived, and helps young athletes put financial plans in place from their earliest money-earning playing days. Terry provides these players with ongoing financial counsel right through their sports careers and into post-retirement careers.
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